Whenever EPA Administrator Gina McCarthy talks about the Clean Power Plan, the word of the day is always “flexibility.”

Pursuant to her telling, the regulation was crafted by EPA so as to give States a near-boundless freedom to choose what they believe is the best path for achieving greenhouse gas emissions reductions. As she told the National Governors Association this past weekend,

We have designed this rule to allow States to design their own pathway forward that is consistent with where they want to see their future in their state and their economy…So we are continuing with collaborating with the States, recognizing that the glue that holds us all together is the flexibility that we have offered.

Later, the f-word popped up again as McCarthy responded to questions about the rule:

Because we’ve provided so much flexibility, every state gets to dictate for themselves [their compliance strategy]

Finally, Administrator McCarthy intimated that EPA granted so much flexibility to the States, that Governors could somehow leverage the Clean Power Plan into a central plan that would create wealth and reduce unemployment: [click to continue…]

Last April, EPA and the U.S. Army Corps of Engineers jointly proposed a regulation that would “clarify” federal jurisdiction under the Clean Water Act. Both agencies—rather than EPA alone—administer the Act, which is why both agencies proposed the jurisdictional rule.

On February 4th, EPA administrator Gina McCarthy told a congressional committee that her agency was working on a number of revisions to the rule. However, her suggested alterations were news to the U.S. Army Corps of Engineers, EPA’s supposed partner, according to a report last Friday by Inside EPA ($):

Moreover, the industry source says the Corps does not does appear to have seen a draft of any revised changes since November, and a second industry source similarly says that Corps staff have “expressed frustration” that they’ve had limited involvement in the rulemaking.

Thus, EPA reportedly has sidelined the U.S Army Corps of Engineers. Unfortunately, this is only the latest instance of EPA refusing to cooperate with a sister federal agency.*

EPA’s repeated spurning of federal agencies within the same administration raises an important question: Is there anyone with whom Obama’s EPA will work, besides the green lobby?

Last weekend, there were again no questions about climate change on any of the four Sunday morning political talk shows (i.e., NBC Meet the Press, ABC This Week, CBS Face the Nation, and Fox News Sunday). In the five weeks since the SOTU–during which President Obama announced that “no challenge poses a greater threat to future generations than climate change”–these shows collectively have fielded exactly one question about AGW. And the purpose of that lone query, asked last week by ABC This Week’s Jon Karl, was to second-guess the President’s belief that AGW is no less a threat than *violent extremism* or Russian aggression. As I’ve previously explained, the absence of climate questions “is notable insofar as these shows are the embodiment of the political establishment. By ignoring the putative AGW threat to national security, they suggest that conventional wisdom on the issue rests well to the right of the President.”

There is much misplaced media optimism over Apple’s announcement this month that it would pay $850 million to purchase 25 years of output from 130 MW of solar power nameplate capacity (with an estimated 30% capacity factor) to be built in Monterey County, California.

Bloomberg’s Tom Randall wrote that the deal will be “profitable” for Apple. It’s unclear how he could know this given that the full contract terms haven’t been disclosed, as Randall himself concedes. More importantly, what little that is known about the deal suggests that it will be far from “profitable” for Apple (see next point).

Slate’s Daniel Gross wrote that the deal is proof that solar power “can compete on or near equal footing with other sources of power.” Yet initial analysis of the deal’s terms by Forbes’s Christopher Helman, based on the announced sale price and the likely capacity factor of the planned solar power plant, suggests that Apple will pay roughly $100/MWhr for electricity; by comparison, wholesale electricity on the California spot market now costs about $34/MWhr. [click to continue…]

That there are three kinds of untruths—“lies, damned lies, and statistics”—is an apocryphal phrase of great relevance to the modern regulatory state. For it is with ease that regulators manipulate math in order to legitimate their otherwise unjustifiable actions.

EPA’s top statistician

Of course, these sorts of shenanigans wouldn’t be necessary if the system worked as intended. If federal agencies were full of disinterested civil servants toiling on behalf of the public interest, then there’d be no need for fuzzy math. But that’s not what exists, alas. Instead, federal agencies have become political chips to be doled out to special interests,* in exchange for their having helped elect a given President. Having thus captured federal agencies, these special interests employ the power of the state to advance their narrow causes. And this is why statistical lies are necessary: They obfuscate the unsavory quid pro quo politics that undergird the modern regulatory state.

Consider, for example, the extreme degree to which EPA now serves NRDC and Sierra Club, rather than the American people. Over the last five election cycles, such green groups have become an increasingly important cog in the progressive political campaign machinery. As a result, they’ve enjoyed unprecedented access at the EPA. They dominate the ranks of political appointees, and have had an inordinately heavy hand in reg writing. From the fact that no agency has been as thoroughly captured as EPA, it follows that the agency long has excelled in the black arts of conjuring quantitative “benefits” from thin air.

Take EPA’s bedrock bullshit statistic: the value of a life “saved” by one of the agency’s air quality rules. Whenever you hear EPA administrator Gina McCarthy talk about the trillions of dollars in economic activity *created* by the Clean Air Act, her point is founded upon the value of a statistical life. There is no greater proffered justification for EPA’s existence than the statistical value of life. And how does the agency achieve this crucial figure? Here’s how EPA describes its calculation: [click to continue…]

The UK Climate Coalition announced on Saint Valentine’s Day that British Prime Minister David Cameron, Deputy Prime Minister Nick Clegg, and Leader of the Opposition Ed Miliband had signed a joint agreement on climate policy. The leaders of the three main political parties—Conservative, Liberal Democratic, and Labor—pledge to work together on three key areas: achieving a new legally-binding UN climate agreement that limits global warming to two degrees Celsius; agreeing on a “carbon budget” that achieves the targets set in the Climate Change Act of 2008; and enacting policies that “accelerate the transition to a competitive, energy efficient low carbon economy” and that shut down coal-fired power plants unless they are equipped with carbon capture and storage technology.

London’s political establishment has been in full agreement on global warming and energy-rationing policies for many years. The Cameron-Clegg-Miliband pact seems to me a potentially significant step beyond the existing consensus for at least two reasons. First, it means that climate policy will not be an issue between the three parties in the upcoming general election campaign. It will be up to the United Kingdom Independence Party (UKIP) to challenge the establishment consensus. Polling has shown that most Britons, like most Americans, don’t believe global warming is a crisis that warrants the ruinously costly policies supported by the three major parties. [click to continue…]

When it comes to reliability, I don’t trust EPA for a simple reason: On this matter, the agency has demonstrated that it is untrustworthy.

Consider, for example, the agency’s absurd Utility MACT. The rule was promulgated in 2012, and it will remain the most onerous regulation ever imposed on the electricity sector, until the agency promulgates the Clean Power Plan this summer. Regarding reliability, the utility MACT threatens to shutter up to 25% of the nation’s fleet of coal-fired power plants upon implementation this spring; EPA’s analysis, alas, severely lowballed retirements due to the rule, as noted last year by FERC Commissioner Philip Moeller.

Worse still, EPA completely whiffed on the nature of the threat posed by the Utility MACT. In its reliability analysis, EPA focused on how the regulation would influence peak summer demand. In reality, the rule’s most pressing peril involves electric reliability in certain regions—primarily in the northeast—during the winter. The problem is that the Utility MACT, by closing coal plants, increases demand for gas for electricity during cold winter months when gas demand is already high (for space heating), and the gas infrastructure doesn’t yet exist to meet this aggregate demand.* If next winter (after the rule’s implementation this spring), is anything like the last two winters, then there could be serious problems in New England. EPA’s utter failure to identify this threat does not inspire confidence.

EPA’s reliability assessments of the Clean Power Plan have been similarly unimpressive. As is explained here, the Clean Power Plan would fundamentally overhaul the electricity sector. Obviously, such a significant change engenders reliability concerns; EPA’s own preliminary analysis suggests as much. Despite the high stakes, EPA Administrator Gina McCarthy has averred that she’s “tired” of talking about the rule’s threat to reliability. For the sake of the U.S. economy, I hope she’s not too tired to do a better job than the agency did on the Utility MACT.

Unfortunately, current events suggest she won’t. This week, Office of Air and Radiation chief Janet McCabe’s told the National Association of Regulatory Utility Commissioners that regulated entities, rather than the federal government, are responsible for ensuring that EPA’s Clean Power Plan doesn’t turn out the lights. [click to continue…]

Last week, the Senate Environment & Public Works Committee held a hearing featuring EPA Office of Air & Radiation chief Janet McCabe, on the subject of EPA’s climate regulations. During his five minutes of questions, Sen. David Vitter (R-Louisiana) pursued a line of inquiry regarding the outsized role played by NRDC in the drafting of the Clean Power Plan for existing power plants. As reported by the New York Times, 3 lobbyist/lawyers at the NRDC wrote the “blueprint” for the regulation, which would fundamentally overhaul the electricity sector. This is unseemly because, in 2008 and 2012, NRDC spent a great deal of resources getting President Obama elected. An impartial observer easily could conclude that NRDC was being rewarded with policymaking prerogatives, in exchange for having helped elect Obama.

In pressing his point, Sen. Vitter held up a placard featuring an email exchange between an NRDC lobbyist and a top EPA political appointee, in which the former pitches to the latter the idea of the drafting a template Clean Power Plan ‘federal implementation plan’ (a.k.a. a “FIP”). In seeming conformity with the NRDC’s direction, EPA last month proposed a Clean Power Plan model FIP (discussed here, here, and here at length).

Sen. Vitter expressed his belief that this behavior was inappropriately collusive. And it was, judging by the evidence at hand (i.e., the email depicted on the placard). Yesterday, however, NRDC alleged that Vitter doctored the email to make his case. According to E&E GreenWire’s Jean Chemnick ($): [click to continue…]

A Lively Debate, The Peril of Rushed Regulations, and a Classic Example of the Practice

Last Friday, I participated in a Federalist Society Teleforum on “’Sue and Settle’ and the Endangered Species Act,” with Assistant Professor Justin Pidot of the University of Denver Sturm College of Law and Susan Combs, former Texas Comptroller of Public Accounts. It was a lively discussion, and I think all parties acquitted themselves well. Listen here.

An adverse policy outcome often attendant to “sue and settle” agreements are low quality rulemakings due to impossibly tight deadlines. For example, consider EPA’s absurd Utility MACT, which threatens to shut down 25% of the nation’s coal-fired power capacity in order to achieve illusory benefits. EPA agreed in an October 2009 consent agreement to issue a final Utility MACT rule by November 16, 2011. Thanks to this too-ambitious schedule, EPA was forced to rush to complete the rule (which ultimately was finalized in February 2012). It is news to no one that rushed work is careless work; accordingly, the final Utility MACT was rife with errors. As a result, EPA constantly has been amending the rule. In the 3 years since the rule went final, EPA has: finalized a round of major corrections (4/19/2012); formally reconsidered the rule three times (11/30/2012; 4/24/2013; 11/19/2014); and partially stayed it once (8/2/2012). On Tuesday EPA proposed yet another round of significant corrections for the rule. Of course, this is terrible for regulatory certainty. Because the agency committed itself to an impossible deadline, it promulgated a highly flawed rule. As a result, about twice a year on average since the rule went final, utilities have had to deal with substantive changes to this hugely consequential rule. [click to continue…]

As discussedpreviously on this blog, EPA in a Feb. 2 comment letter challenged the State Department’s assessment that the Keystone XL Pipeline (KXL) is actually the low-carbon option facing U.S. policymakers.

State reasoned that if permission to build the KXL is denied, roughly the same quantity of oil-sands crude would reach U.S. refiners, it would just come by alternate routes. The alternatives, principally rail, would consume more energy than a single large pipeline. Thus, compared to the proposed KXL, the alternatives would emit 28% to 42% more carbon dioxide (CO2). See p. ES-34 of State’s Final Supplemental Environmental Impact Statement (FSEIS).

Policy implication: Approving the KXL is the ‘climate-friendly’ choice.

To rebut this analysis, EPA seized on a passage in the FSEIS in which State opines that the extra cost of transporting crude by rail could make new oil sands development uneconomical if long-term prices fall below $75 per barrel (ES-12). Noting that prices in recent weeks have been as low as $50 per barrel, EPA speculates that approving the KXL could “change the economics of oil sands development and result in increased oil sands production, and the accompanying greenhouse gas emissions, over what would otherwise occur.”

Predictably, anti-Keystone groups hailed EPA’s letter as proof that the KXL would “significantly exacerbate the problem of carbon pollution” and, thus, fail President Obama’s national-interest ‘litmus test,’ announced in his June 25, 2013 climate change speech at Georgetown University.

Keystone bashers conveniently overlook the obvious. Oil prices are volatile. Prices are low today but neither EPA nor anyone else knows what the price of oil will be a year from now, much less over the lifetime of the proposed project.

As TransCanada, the company seeking to build the KXL, pointed out last week in a comment letter rebutting EPA, Canadian oil sands development took off in late 2008, when oil prices were $41 per barrel, and increased through 2009, when oil prices were generally under $75 per barrel.

Here’s the kicker. When it comes to the KXL, EPA views the recent decline in oil prices as a big deal. But when it comes to the agency’s fuel-economy regulations, EPA regards low oil prices as a nothingburger. [click to continue…]